They Came, They Saw, They Slumped, They Conquered
These actively managed Medalist funds show that the path to long-term outperformance is often paved with brief periods of underperformance.
Top-ranking funds aren't perennial. Morningstar and other investors, researchers, and fund firms have pointed out that even funds with the most-successful long-term records inevitably look like failures for short periods of time. This is evident among funds with Morningstar Analyst Ratings of Gold, Silver, or Bronze.
Of the 202 rated actively managed funds with manager tenures of at least 10 years and 10-year Morningstar Category rankings in the top fourth of their respective peer groups, 144, or 71%, lagged their peers in at least three of the prior 10 calendar years. If you include funds that trailed their average rivals in two or more annual campaigns you get 183, or 90% of the total. More than half of the funds suffered two or more consecutive years of relative underperformance.
Dan Culloton does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.